Auto insurance reform bid hits snag: Lack of votes

House Speaker Tom Leonard, R-Dewitt (from left), Detroit Mayor Mike Duggan and Rep. Lana Theis, R-Brighton Township, chair of the House Insurance Committee, announce bipartisan legislation designed to reduce Michigan drivers’ insurance payments on Sept. 26 at the state Capitol in Lansing. The legislation has run into bipartisan opposition in the House since being introduced.

Duggan and his Republican partners don't have the votes

Lawmakers concerned plan will dump costs onto the Medicaid

Deep opposition to the Medicare-level fee schedule

Mayor Mike Duggan's messaging mavens must have been smiling ear-to-ear last weekend when Washington Post columnist George Will declared a month before Election Day that the Democratic mayor of Detroit "might be America's most accomplishing politician."

The conservative pundit's column was accompanied by a celebratory-looking photo of Duggan at a news conference, flanked by a clapping Republican House Speaker Tom Leonard and Rep. Lana Theis, the GOP chair of the House Insurance Committee.

The irony is the photo captured Leonard and Theis cheering Duggan for something the mayor has not yet accomplished before he stands for re-election — wholesale reform of Michigan's no-fault auto insurance system.

In the days after Will's syndicated column was published across the country, Duggan's sweeping reforms to drive down Detroit's highest-in-the-nation auto insurance rates ran into an age-old political hurdle: math.

It takes 56 votes in the House, 20 in the Senate and one governor to make law in Michigan.

And according to multiple lawmakers on both sides of the aisle, Duggan and his Republican partners don't have the votes to get their reforms out of committee without substantial changes, much less out of the House and onto a more treacherous political landscape in the Michigan Senate.

"They don't (have the votes) because it's too drastic what they're doing," said Oakland County Executive L. Brooks Patterson, who is leading the opposition to dismantling the state's catastrophic injuries fund. "... The Detroit caucus is our best ally."

Leonard, who is seeking the Republican nomination for attorney general next year, has leaned on Duggan to deliver as many as 15 Democratic votes and the mayor is reportedly well short of that high mark with general opposition coming from most of his fellow Democrats.

"The bill doesn't meet the criteria that's been outlined in the caucuses' current and past positions," said Rep. Sherry Gay-Dagnogo, D-Detroit.

House Democrats have long wanted auto insurance reform that removes nondriving factors like credit scores and education level from how car insurance is priced in Michigan, as well as guaranteed — and lasting — premium reductions. Duggan has said axing credit scores from auto insurance rating factors is "not politically possible."

The biggest criticism of the Duggan-Leonard-Theis plan centers on the three-tier system of medical coverage allowing drivers to opt to purchase as little as $25,000 in post-hospitalization care in lieu of the current unlimited medical coverage. That plan promises an average 20 percent reduction in premiums for a period of five years.

Theis said giving drivers the choice to opt out of the unlimited medical coverage and utilize their health insurance for costs beyond the $25,000 cap is a response from drivers "crying" for lower auto insurance rates.

"If the people will listen outside of the Lansing bubble, this is not a hard decision to make," said Theis, R-Brighton Township.

"I've got strong concerns in regards to the impact it would have for people who ended up in that catastrophic accident," said House Minority Leader Sam Singh, D-East Lansing. "I just want to make sure that we're protecting those individuals going forward."

There's also deep opposition from members of both parties to the Medicare-level fee schedule for auto accident procedures that is proposed under Theis' House Bill 5013.

A lobbyist for the Michigan Health & Hospital Association has called those payment rates "draconian" compared to today's uncapped charges — and lawmakers on both sides of the aisle appear to be listening.

A bipartisan coalition of House members sought to capitalize Thursday on the apparent stalemate by putting forward a new 15-bill package that contains a host of provisions geared toward reining in medical costs for car accidents, but not placing any kind of cap on benefits.

"We wanted to get a plan out there that could be a counter to the Duggan proposal and show there's another path," said Rep. Michael Webber, a Rochester Hills Republican. "The (Duggan) proposal seems weighted more toward the insurance companies."

The alternative plan calls for a medical payment schedule at 185 percent of the workers compensation system — the payment level endorsed by the Coalition Protecting Auto No-Fault, a group of doctors, medical clinics and trial attorneys who treat and represent injured drivers.

That payment rate would, for instance, lower the cost of an injured driver's shoulder surgery in the metro Detroit hospital market from $2,800 to $1,740, instead of the $730 that Medicare would pay under Duggan's plan, according to medical billing data compiled by Mitchell International Inc.

The $25,000 personal injury protection benefits Duggan and company propose is aimed at cutting off what has become a lucrative pot of money targeted by trial attorneys whose firms handle an injured driver's medical bills and pocket a third of the claims paid by insurers.

Crain'sreported last week that the number of first-party lawsuits over personal injury benefits skyrocketed by 130 percent statewide over the past decade, with the largest concentration of increases being in Detroit, Wayne County and the suburbs of Macomb County.

The alternative reform proposal contains a lot of the same provisions in the Duggan-Leonard-Theis plan.

Lawmakers from both parties and both chambers have agreed in principle for years on the need for a state authority to combat medical care fraud in the system.

"We think if a lot of this stuff happens, you're going to see a reduction in rates," Webber said. "If you can get the fraud out of the system, get the lawsuits out of the system, those costs are just passed along to the customers."

But the fraud authority reform has died in multiple legislative sessions as lawmakers have been unable to agree to a grander auto insurance plan.

Rep. Mike McCready, a Bloomfield Hills Republican who is a firm "no" vote on the Duggan-Leonard-Theis plan, said lawmakers should start with voting on the fraud authority and reining in seven-day insurance plans that allow half of the motorists in Detroit to drive without insurance 51 weeks a year.

McCready is advocating for smaller steps, instead of the big win Duggan and Leonard are looking for.

"Right now, it seems like ... they want to run the ball back and spike it in the end zone," McCready said. "Let's just take the ball and run it three or four yards at a time."